Sands' Time Running Out

Sheldon Adelson may be able to yell at the President of the United States and smooth talk Chinese officials, but lenders are proving much more difficult.

His Las Vegas Sands gambling company, which owns the Venetian and other casinos, released a letter from its auditor warning that the company is in danger of failing.

Shares of the Las Vegas Sands tumbled more than 30 percent. The auditor, PricewaterhouseCoopers, said that "based on current estimates, the company expects it will not be in compliance with its maximum leverage ratio covenant for the quarter ending December 31, 2008." The consequent defaults, the accounting firm said, raise "substantial doubt about the company's ability to continue as a going concern.

Connie Bruck profiled the 75-year-old Adelson, a big donor to President Bush and to Israeli causes, in the New Yorker in June.

Adelson is the latest elderly mogul who has been forced by the credit crunch to scramble to try to hold on to his empire. The company had $8.8 billion in long-term at the end of June.

Adelson pumped in $475 million of is own money in September to keep the company in compliance with the terms of its debt. But analysts and credit rating agencies have been wary of the company's ability to keep going unless it raised significant new capital.

Last week, Standard & Poor's lowered its rating on Las Vegas Sands, citing "our continuing concerns regarding the weakening U.S. economy and its likely affect on gaming markets, such as Las Vegas."

The company is developing resorts and casinos in Singapore and Macau to tap a healthier gambling market in Asia. But it may be overstretched at a time when it needs some $1.2 billion over the next year to stay in compliance, according to a Banc of America Securities analyst.

Adelson has fallen before only to rise again. So it may be too soon to write him off. As he said earlier this year, "In my sixty-three years in business, in over fifty different businesses, I've broken the mold and changed the status quo."